The government is paying Medicare managed-care plans 7% more than it would cost to treat the same patients in traditional Medicare, the Medicare Payment Advisory Commission said in a new report. In some areas, payments exceed traditional Medicare costs by more than 20%.
Health insurers say the higher payments authorized under the new Medicare reform law are a step toward stabilizing the Medicare managed-care program. Skimpy reimbursement had been driving insurers from the market.
The report assumed that people who enroll in managed-care plans are no more sick or well than seniors in traditional Medicare, although government studies have found that healthier seniors tend to sign up for managed care. In that case, the report said, Medicare would be paying even more on average.